Question

charles is going to purchase a new car that has a list price of $21,450. he is planning on trading in his good-condition 2004 dodge neon and financing the rest of the cost over three years, paying monthly. his finance plan has an interest rate of 12.28%, compounded monthly. charles will also be responsible for 6.88% sales tax, a $1,089 vehicle registration fee, and a $124 documentation fee. if the dealer gives charles 80% of the listed trade-in price on his car, once the financing is paid off, what percent of the total amount paid will the interest be? (consider the trade-in to be a reduction in the amount paid.)

Answer 1

The percent of the total amount paid that the interest will be is 16.70%.

How to calculate the percentage?

It should be noted that interest has to do with the monetary charge incurred by an individual who borrows.

Based on the information, the after tax amount that Charles will get will be:

6591 × 80% × (1 - 6.88%) = $4910

The total amount that he needs to pay will be:

= $21450 + $1089 + $124

= $22663

The net payment will be:

= $22663 - $4910

= $17753

The monthly payment at 12.28% for 3 years is represented as $592. Therefore, the amount to be repaid will be:

= $592 × 36

= $21312

Therefore, the percentage of interest will be:

= 3559/21312 × 100

= 16.70%

In conclusion, the correct option is 16.70%.

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